JFO warns payroll-tax fund and current subsidies fall short; FY27 adds $6.5M for childcare assistance

Lawmakers at a Feb. 24 joint hearing heard from the Legislative Joint Fiscal Office that the child-care payroll tax and the Child Care Contribution Special Fund do not currently generate enough revenue to cover the state's commitments under the Child Care Financial Assistance Program (CCFAP).

In response to a committee question about the fund's ability to cover promised subsidies, JFO said the fund's receipts are insufficient without additional general-fund support. The presenters noted a sharp rise in families accessing CCFAP since October 2024 when benefit changes went into effect and described the program as now operating as an entitlement in practice.

JFO said the FY27 executive budget includes an additional $6.5 million in general-fund support to the Department for Children and Families to help cover anticipated childcare financial assistance costs. Presenters and members cautioned that continuing need depends on enrollment trends, future reimbursement rates, and any policy changes that alter program hours or eligibility.

The office recommended further work with Ways and Means and Education committees and more detailed data collection to estimate longer-term fiscal needs before committing to structural changes in program responsibilities or funding flows.